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Foundations of Casualty Actuarial Science

(iii) Responsiveness to change - an exposure unit that
reflects changes in the exposure to loss is preferable
to one which does not. The exposure unit for
workers' compensation insurance is payroll.

(iv) Historical practice - where a significant body of
historical exposure data is available, any change in
the exposure base could render the prior history
unusable. Since ratemaking generally depends upon
the review of past statistical indications, exposure
bases are rarely changed once established.

b) Claim - A claim is the demand for payment by an insured
or by an injured third party under the terms and conditions
of an insurance contract. The individual making the claim
is the claimant, and there can be multiple claimants for
a single claim.

Claim statistics is the key element in ratemaking.
Generally insurers maintain claim data based upon
accident date (i.e the date of occurrence of the accident)
and report data (i.e the date the insurers receive the

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